Our business model

Carefully designed to create long-term value and shared prosperity for our shareholders and other stakeholders, leveraging our core strengths and expertise to capitalise on growth opportunities available to us across the upstream value cycle.


1. Acquire

  • To date, we have acquired direct interests in five blocks and a revenue interest in one further block, located in the onshore and swamp areas of the Niger Delta. We will continue to pursue new acquisition and farm-in targets to help us grow reserves and production.
  • In line with our strategy, we will maintain a price-disciplined approach and prioritise opportunities in the onshore and shallow water offshore areas of Nigeria that offer near-term production, cash flow and reserve replacement potential.
  • In January 2016, the full transfer of operatorship to Seplat on OML 53 (onshore north eastern Niger Delta), where it has a 40% working interest, was concluded and a revised set of commercial terms agreed whereby Seplat’s participation in OML 55 (in the coastal zone of south eastern Niger Delta) will take the form of a revenue interest until a sum of US$330 million has been paid to Seplat over a six-year period through allocation of crude oil reserves. These acquisitions have expanded our footprint in the Niger Delta and further cement our position as a leading indigenous independent E&P in Nigeria.
  • The acquisition of an interest in OML 53 in particular, places Seplat at the heart of one of Nigeria’s largest greenfield gas and condensate development projects that is set to drive future growth of our gas business and cement our position as a pre-eminent supplier of gas to the domestic market. Access to capital is also key to fund the acquisition of new opportunities. In 2105, we successfully completed, in difficult market conditions, a US1 billion debt refinancing with a suite of Nigerian and international leading banks.

2. Explore & appraise

  • In 2016, we did not drill any exploration or appraisal wells, electing instead to scale back capital expenditures against a weak oil price backdrop and unprecedented levels of interruption to oil production following the declaration of force majeure on 21 February by the operator of the Forcados terminal (Shell Nigeria).
  • Through the acquisition of an interest in OML 53 (the full transfer of operatorship being concluded in 2016), we have not only extended our inventory of development opportunities but also our inventory of exploration leads and prospects. It is our intention to fully assess the exploration potential of this block and incorporate into our overall planning in future years.
  • We will continue to appraise and test upside at our producing fields and also have a number of discovered but undeveloped discoveries on our blocks, some of which may be considered as appraisal targets in the future.

3. Develop

  • Since we acquired our interest in OMLs 4, 38 and 41 in July 2010, as operator we have drilled 45 new development wells, completed multiple workovers, reactivated production from pre-existing wells, constructed and installed a new liquid treatment facility, upgraded and significantly expanded the Oben gas plant, completed a new liquids pipeline linking our assets directly to the Warri refinery, installed additional storage capacity and implemented gas lift to aid our production with pressure support.
  • Development activity in 2016 was largely focused around the Oben gas processing plant Phase II expansion project. This involved the installation of a further three 75 MMscfd processing modules (225 MMscfd aggregate capacity) that will see overall Company operated gross processing capacity leap from 300 MMscfd to a minimum of 525 MMscfd. We did not drill any new development wells in 2016 owing to the weak oil price backdrop and unprecedented levels of interruption to oil production following the declaration of force majeure on 21 February by the operator of the Forcados terminal (Shell Nigeria).
  • In recent years, Seplat has been one of the most active drillers in Nigeria and has successfully undertaken and completed significant facilities and infrastructure projects on a fast-track timetable and within budget.

4. Produce, process & sell

  • At OMLs 4, 38 and 41 we have increased liquids production six-fold from an initial gross rate of 14,000 bopd at time of acquisition in 2010 to a peak rate of over 84,000 bopd (prior to shut-in of the Forcados terminal in mid February). Similarly, we had seen our overall annualised average working interest production grow during this period, from 21,431 boepd in 2011 (our first full year of operations) to 43,372 boepd in 2015. Prior to shut-in of the Forcados terminal in mid-February 2016, our working interest production was running at an average rate in excess of 52,000 boepd.
  • A key priority of ours is to actively pursue alternative crude oil evacuation options in order to reduce any over-reliance on one particular third-party pipeline system and/or export terminal. In line with this objective during 2016, we established an alternative option for crude oil and condensate produced at OMLs 4,38 and 41 whereby crude oil is sent to available storage tanks at the Warri refinery, via our own 100,000 bopd capacity pipeline, from where the barrels are then sold FOB at a loading jetty to our offtaker Mercuria. By the end of 2016, a net volume of 1.4 million barrels had been monetised through this route (Seplat’s equity barrels), with the target being to export a gross average of 30,000 bopd on a longer-term basis. Furthermore, as a direct result of this alternative export route via the Warri refinery, we were able to de-constrain gas production (previously impacted by condensate handling constraints following shut-in of the Forcados terminal) and greatly improve security of domestic supply. Seplat is also supporting NAPIMS (a 100% subsidiary of NNPC) on completion of the 160,000 bopd capacity Amukpe to Escravos pipeline system that will offer a third export route via the Escravos terminal.
  • Seplat has grown its natural gas output dramatically and in 2016 supplied 210 MMscfd gross exclusively to the domestic market, enough gas to underpin around a third of Nigeria’s current power generation. The Phase II expansion of the Oben gas processing plant will provide headroom to further increase future gas production in the near term, whilst the development of our gas reserves at OML 53 offers significant growth potential in the medium term.

5. Strong margin cash flow

  • It is important to maintain the financial strength and financial flexibility to fund our work programme at our existing portfolio and also the range of growth opportunities available to us.
  • We aim to operate in the E&P “sweet-spot” whereby cash flow generation from our current portfolio more than covers investments there too.
  • We also seek to utilise appropriate external funding sources,including debt, in support of new business opportunities where up-front acquisition costs and early capital investments may be required to bring them to self-funding status over the long term.

6. The value we create

Shareholder value

  • In addition to offering strong capital growth potential through the successful execution of our strategy, we also have a clear dividend policy that, in the absence of adverse macroeconomic conditions, should allow us to pay our shareholders a regular dividend taking into account our financial position and funding requirements.

Country and stakeholder benefits

  • We are proud of the positive impact our business has on the country. In addition to the government royalties and taxes levied on our revenues, we have directly and indirectly created over 1,300 jobs and the gas we produce is enough to underpin around a third of Nigeria’s current power generation.
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